An audit committee is an operating committee of the Board of Directors. Committee members are drawn from members of the company's board, with a chairperson selected from among the members. The committee's role is better described as oversight or monitoring, rather than execution. The responsibilities of the audit committee typically include:
- Overseeing the financial reporting and disclosure process;
- Monitoring choice of accounting policies and principles;
- Overseeing hiring, performance and independence of the external auditors;
- Oversight of regulatory compliance, ethics, and whistleblower rules;
- Monitoring the internal control process;
- Overseeing the performance of the internal audit function;
- Monitoring the risk management policies and practices.
The duties of an audit committee are typically described in a committee charter.